August, 2010

AGENCIES ISSUE REGULATIONS ON PREVENTIVE SERVICES On Monday, July 19, 2010, the Department of Health and Human Services (HHS) along with the IRS and the Employee Benefits Security Administration released interim final rules relating to coverage of preventive services under the Affordable Care Act. These rules require health plans (including Medicare and Medicaid) and health insurance issuers to cover recommended preventive services without imposing cost-sharing requirements in the form of deductibles, co-insurance or co-payments when preventive services are delivered by a network provider. Plans will still be able to impose these cost-sharing requirements on preventive services delivered by a non-network provider. These rules will take effect for plan years beginning on or after September 23, 2010 (with the exception of grandfathered plans). The proposed rules will apply to four categories of preventive services: Evidence-based services rated A or B under current recommendations of the U.S. Preventive Services Task Force. This means that screenings for breast and colon cancer, diabetes, high blood pressure and high cholesterol will be covered, as well as tobacco cessation counseling. Routine immunizations for children, adolescents and adults recommended by the Advisory Committee on Immunization Practices. This includes routine childhood vaccinations as well as periodic tetanus shots for adults. Evidence-informed preventive care and screenings for infants, children and adolescents. This includes regular pediatrician visits, vision and hearing screening, developmental assessments, immunizations and obesity screening and counseling. Evidence-informed preventive care and screenings for women. HHS is expected to issue guidelines for this category of preventive care soon. As new guidelines and recommendations for preventive care are developed, health plans and health insurance issuers will have to cover them without imposing cost-sharing requirements beginning with the plan year that is one year after the date of the publication of the guideline or recommendation. The issuing agencies estimate that the effect of these rules will be to increase premiums by about 1.5% on average. AGENCIES ISSUE REGULATIONS ON CLAIMS AND APPEALS On Friday, July 23, 2010, the Departments of Health and Human Services, Labor and the Treasury released interim final regulations implementing the enhanced internal claims and appeals and external review processes under the Patient Protection and Affordable Care Act. These regulations will generally affect health insurance issuers, group health plans and participants, beneficiaries, and enrollees in health insurance coverage and group health plans, and are effective for plan or policy years beginning on or after September 23, 2010. The regulations have broad applicability. The IRS regulations affect private-sector and church group health plans and insurers; the DOL regulations apply to ERISA plans and their insurers; and the HHS regulations apply to governmental plans and insurers operating in the group and individual markets under the Public Health Service Act (PHSA). Compliance responsibilities vary for insured and selfinsured plans. Self-insured plans under ERISA must comply with all of the rules, while insured plans or their insurers must comply with the internal claims and appeal rules. The insurer remains responsible for complying with the external review requirements. However, grandfathered plans and plans providing "excepted" benefits under HIPAA are not required to comply. "Excepted" benefits include most health FSAs, some HRAs and limited scope dental and vision plans. The effect of these new regulations is to extend the application of existing DOL claims procedure regulations to non-ERISA governmental and church group plans. These regulations also enhance existing DOL regulations by expanding the definition of "adverse benefit determination" to include rescissions of coverage; shortening the deadline for making urgent care determinations from 72 hours to 24 hours; adding criteria that spell out what constitutes a "full and fair review" including giving claimants the opportunity to present evidence and testimony and to give claimants sufficient time to review and respond to any new evidence adduced by the insurer or plan; adding criteria to avoid conflicts of interest in the selection of persons to conduct the claims review; expanding the content that must be included in any benefits denial notice; permitting a claimant to go to court without exhausting the plan's internal review and appeal procedures if the plan or insurer fails to "strictly adhere" to the new requirements; allowing claimants to obtain a review of a "final internal adverse benefit determination" by an "independent review organization" (IRO); extending federal external review procedures to self-insured group health plans and insurers that are not subject to state regulation; and requiring the provision of notices describing the claims review and appeal rules in a "culturally and linguistically appropriate manner" if the plan covers a specified minimum number of participants who are literate in the same non-English language. This last provision goes substantially beyond current ERISA requirements which only require that "assistance" be provided to non-English readers. Under the new regulations, relevant notices will have to be translated into the appropriate language upon request and once translated, all subsequent notices to the claimants must also be translated. These regulations may be found at http://edocket.access.gpo.gov/2010/pdf/2010-18043.pdf. An accompanying Fact Sheet may be found at: http://www.dol.gov/ebsa/newsroom/fsaffordablecareact.html. HEALTH CARE REFORM MAY EXTEND LIFE OF MEDICARE Each year the Trustees of the Medicare trust fund report in detail on its financial condition. The financial status of the trust fund is substantially improved by the lower expenditures and additional tax revenues instituted by the Affordable Care Act. These changes are estimated to postpone the exhaustion of hospital insurance trust fund assets from 2017 under the prior law to 2029 under current law. Many critics argue that these savings are illusory because Congress is likely to make changes in the future; however, the Trustees are obligated to make their calculations based on current law. The release of this report was delayed from its normal schedule to allow incorporation of the effects of the health care reform legislation, which contained roughly 165 provisions affecting Medicare. Please contact Garner Consulting for assistance with any of these issues. * * * * * Garner Consulting does not practice law. Please seek qualified counsel if you need legal advice. For employee benefits consulting, please call John Garner, Gerti Reagan Garner or Zaven Kazazian at (626) 351-2300. Please visit our web site at www.garnerconsulting.com, where you can find back issues of our Bulletins.